Picking shares and sticking with them to avoid the impact of sudden stock
market movements is the preferred investment strategy for members of Plan B
Investment Club.

After a decade of equity-based investment, they have plenty of experience and reckon that while markets are quick to price in bad news, they are also good at predicting an economic recovery.

David Sampson, 50, a computer consultant and chairman of the club, based in Chesterfield, Derbyshire, said: "We know the stock market turbulence won't go on forever, and reckon that we will be able the ride out the economic slowdown by holding a mixture of solid stocks, along with a few favourites.

"The recession will inevitably have an impact on our portfolio, but we have learnt over time that there can also be a sudden market recovery – although caution is important at this stage."

Members have held on to a mix of blue-chip or large company shares and smaller stocks on the Alternative Investment Market (Aim), despite the highs and lows of the market over the years. Their portfolio currently consists of 17 stocks across a range of sectors.

The club is ranked 49th out of 302 in the Barclays Stockbrokers Daily Telegraph Investment Club Competition, with a portfolio that has fallen by 25pc for the year so far to around £40,000. However, members hope that some shrewd stock choices will boost its value.

In June, the club made a wise decision to sell its holding in Caledon Resources, the coal miner listed on the FTSE Small Cap Index. Members bought 6,000 shares at about 30p each back in 2006. They bought three more tranches, amassing about 21,000 at an average of 46p.

Mr Sampson said: "We sold these at around £1.27 each back in June, making a hefty profit. As a reward, we each paid ourselves £800 from the portfolio – I used this sum to pay off some bills. Since then the price has plummeted, but we still bought another 5,000 shares in September when they were 80p each.

"While mining stocks are suffering, we think buying into this sector is a risk worth taking as it's done so well for us before."

The club's blue-chip holdings include Lloyds TSB, Tesco and Tate & Lyle. "We also chose Bradford & Bingley, which saw us suffer from the sub-prime fallout and we lost quite a lot of money on this choice," said Mr Sampson. "We thought it might be more resilient to the credit crisis, and thought we'd bought at the bottom in March – but we hadn't."

Most stocks in the portfolio are suffering a loss. "However, Tesco and BTG are two that are doing relatively well considering the conditions," said Mr Sampson.

Members bought around 3,000 shares in Tesco three years ago at £2.42, and plan to hold these as a defensive blue chip during the downturn. This week shares were changing hands for about £3.06.

Mr Sampson said: "It's a good dividend payer, too, and we reckon supermarkets should be all right during the recession as they're well positioned." A more risky choice is Barratt Developments, the housebuilder listed on the FTSE 250. Members bought 4,000 shares at around £1 each in August. This week they were trading at about 50p.

Mr Sampson said: "We did well with this stock a few years ago, and although it may seem an odd time to buy into this sector we didn't want to lose out if it started to recover.

The club was originally called the Marketeers, and members pocketed the £5,000 prize some years ago. "So we're hoping to repeat our success," Mr Sampson said.

Clubs that fancy their chances in the 2008 Daily Telegraph Barclays Stockbrokers Investment Club Competition can register for the £1,000 quarterly prizes by calling 0141 352 3620.

To obtain a free copy of The Daily Telegraph Guide to Investing for Income, in association with St James's Place Wealth Management, please call 0870 830 3406 or go to telegraph.co.uk/readerguides. Written by Ian Cowie, the guide explores the various options for investing for income.